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Norway Urges Oil Firms to Think Long-Term


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Norway Urges Oil Firms to Think Long-Term

Business

Category: Energy

Investments in Norway’s key oil and gas sector will fall further in 2016 and in the coming years following a 16-percent drop in 2015, the Norwegian Petroleum Directorate (NPD) said in its annual update, suggesting more pain ahead for the country’s economy..

The head of the Norwegian Petroleum Directorate, Bente Nyland, made the following comments to Reuters on Thursday:

ON THE DROP IN OIL PRICE TO AROUND $30 PER BARREL

“It is clear that it is worrying with the fall in oil prices combined with a continued high-cost level.

“We are starting to see some bright spots as the firms work on cutting the costs … In general we think it will work out fine, but that is only if we assume that the drop in oil prices is temporary and that in the long term it will stabilize at a higher level.

IF THE OIL PRICE DOESN’T PICK UP?

“Then we will see things halting, decisions won’t be made.

“It is important to us that you consider what the oil price is during a field’s lifetime, and that is what you should calculate, what it is over the 50 years it is going to produce.”

ON OIL FIRMS’ SHORT- VS LONG-TERM STRATEGY

“It can appear as if the companies are very focused on the next quarter and delivering better and better, but this is a cyclical industry, so we are trying to put pressure on them to think more about the long term.

“Sverdrup is going to produce for 50 years, what happens next quarter is completely uninteresting, but it is maybe interesting for the stakeholders.”

WHAT OIL PRICE DO YOU BASE YOUR OUTLOOK ON?

“We don’t disclose that, but we base it on the trend we have seen over the past half-year.”

ON SVERDRUP PHASE 1 PRODUCTION START

“We have a small disagreement with the operator on this because we have pushed it a little further in time than what the development plan says.

“This is because it is such a complex development that we believe it will be a little delayed compared to what the operator expects. But this is not worrisome.

“We think Sverdrup will come into production around 2020, for phase 1, while phase 2 will start around 2022.”

ON OIL FIRMS’ DIVIDENDS AND WHETHER THEY SHOULD BE SUSPENDED

“We don’t come with either a no or yes to that kind of decisions.”

Source: Reuters

Published: September 25, 2022